Telcos eye up BT’s €460m Irish unit as parent firm exits Ireland

UK telecoms giant to sell-off Irish business as part of major global retrenchment

BT: Vodafone, Virgin and Three may be possible suitors for acquisition of its Irish arm. Photograph: Phil Noble

Ireland’s top telcos Vodafone, Virgin and Three have been touted as possible buyers of BT’s €460 million Irish unit, which the UK telecoms giant is selling off as part of a global restructuring of its business.

Australian investment company AMP Capital, which manages the State-backed Irish Infrastructure Fund, was also flagged as a possible buyer while other industry sources speculated the business may end up in private equity hands.

BT has so far refused to comment on reports of the sale, which has been linked to an accounting scandal at its Italian unit. The company has hired Bank of AmericaMerrill Lynch to conduct the sale. Sources suggested the sales process has been under way for some time.

BT Ireland has operated in the Republic for over two decades, providing communications and IT services to large businesses and the public sector, as well as wholesaling services to other communications companies.

According to regulator ComReg, it has the second-largest fixed-line business behind market incumbent Eir. It also has a sizeable fibre-optic network running alongside the State’s rail network. Its high-profile customers here include Bank of Ireland, Vodafone, Sky and Three.

999 service

BT Ireland currently employs about 650 staff in the Republic, primarily in Dublin, and generated a pretax profit of €34 million on sales of €425 million last year.

The company also operates the State’s 999 emergency call services, a contract said to be worth €50 million over five years. Vodafone, Virgin and Three declined to comment on what they described as “market speculation”. A spokesman for Eir, however, said the company was not involved in the sale.

BT entered the Irish market in 2000 via the acquisition of a controlling stake in Denis O’Brien’s Esat. The company’s mobile arm was later rebranded as O2 and is now part of Three. BT also sold on the fixed-line business to Vodafone to focus on corporate customers .

The UK telecoms group has built up a mountain of debt – over £12 billion – buying up assets over the past 20 years.

Italian situation

And while the sale of its Irish arm has been linked to issues in Italy, it is also seen as part of a global retrenchment in the face of greater competition in its core markets.

“Incumbents around the world are retrenching back into their core areas because they all need capital to build fibre to compete with competing networks,” an industry source said.

BT Ireland was understood to be deeply unhappy at the Government’s recent decision to renew telecoms firm Enet’s contract to operate the State-owned Municipal Area Networks (MANs), a series of telecommunications networks built around 94 towns, without a tender.

The contract is said to be worth at least €20 million a year to Limerick-based Enet. It was renewed at the same time as Enet was one of the lead bidders, and subsequently the only bidder, for the Government’s National Broadband Plan (NBP).

At a recent meeting of the Public Accounts Committee, BT Ireland’s Peter Evans was asked if Enet’s contract renewal represented a fair and transparent process, to which he answered “There wasn’t a process at all.”